WASHINGTON: The United States is lining up billions of dollars in new economic and military aid to Pakistan despite reports that Islamabad is
using American tax-payer money for deals with the Taliban and accounts of US arms ending up in the hands of the extremists.

Amid an ongoing review of the so-called Af-Pak policy initiated by the Obama administration, Washington, under pressure from influential Senator John Kerry among other lawmakers and lobbyists, is said to be considering a one-time $ 5 billion aid to Pakistan over and above the $ 1.5 billion annual package for ten years currently under review for passage through Congress.

Releasing a report by the think-tank Atlantic Council on Wednesday, Kerry, who is also the chairman of the Senate Foreign Relations Committee and is in a position to pilot the aid package, raised the prospect of a total collapse in Pakistan if it was not helped urgently.

"If we fail, we face a truly frightening prospect: terrorist sanctuary, economic meltdown, and spiraling radicalism, all in a nation with 170 million inhabitants and a full arsenal of nuclear weapons," he said. "The stakes could not be higher, and [this] report could not be more timely."

The 27-page report calls for "a total of $4-5 billion above the (Biden)-Kerry-Lugar proposals and beyond the IMF and other loans from the US. and other sources," for Pakistan. Of this, it recommends, about $3 billion should go to the economic and social sectors directly. About $1 billion of fresh or redirected funds would go to security forces -- both military and law enforcement.

US government reports in recent times have detailed how Pakistan has misused billions in aid for a military build-up against India instead of using it for the intended war on terror. Audits have also detailed million of dollars in fraudulent claims by the Pakistani military. Reimbursement to Pakistan have been halted for several minths because of this but are set to resume soon after the Obama administration has given a green signal pending further audits.

More recent accounts from Pakistan have described how high end US military equipment is ending up with extremists through arms bazaars in the country's frontier. Earlier this week, reports from Pakistan detailed $ 6 million paid through back channels to the Taliban in the latest truce in Swat with more in the pipeline.

Reports of enhanced American aid to a suspect ally at a time of economic woes in the US has caused consternation in strategic circles.

"Not only is the United States paying the Pakistani government to abdicate territory to the Taliban, we get to fund the Taliban as well," said Bill Roggio, an expert in the war on terror, questioning the Kerry-Lugar proposal aimed to tripling military aid to Pakistan.

"It's time for the US. government to ask if it is getting a good return on its investment. Considering that more than $3.8 billion of $5 billion of US. aid to Pakistan has gone unaccounted for and the Taliban is being funded by the US, perhaps the answer is no," Roggio, who runs the blog Long War Journal, added.

Kerry made no mention of any Pakistani transgression in his alarming presentation as he pushed for increased aid amid intense Pakistani lobbying in Washington. Pakistan's foreign minister Shah Mehmood Qureshi, its Army chief Pervez Ashraf Kiyani, and the ISI Director-General Shuja Pasha have been in intense consultations with US interlocutors this week to seek a bail-out for Islsmabad, warning that a meltdown in Pakistan can affect the neighborhood and the whole world.

Although the Atlantic Council report has several recommendations to temper Pakistan's militaristic outlook, its embrace of extremism, and the need to promote peace with India, the proposed aid is not contingent on Islamabad living up to any benchmarks.

The report largely glosses over the Mumbai attack, in which 159 people including six Americans died, while empathizing with Islamabad for its predicament in initiating action against those who plotted the carnage.

"Pakistan must clearly do more to neutralize and control terrorist organizations operating on its soil and hence must meet some demands it believes are harsh and too biased towards Indian preferences," it says on the Mumbai attack, but adds, "Giving Pakistan leeway to do so on its own timetable may be a way out and prevent the government from being seen as doing so at India's bidding."